Privatizing Social Security & Bad Decisions by the Joes Out There

Interestingly, Social Security has not been at the forefront of the election campaign. Perhaps it's a card Obama is waiting to play?

Remember, about 4 years ago, President Bush was trying to privatize Social Security. McCain backed this. Can you imagine what would have happened, given the current economic crisis? Wow.

A follow-on to all of this is related to decisions made by the lower middle class group. The current crisis is based on lower middle class people not repaying their mortgages. Essentially, lending was opened up to allow people with sub-par credit on tight budgets to purchase a home. Surprisingly, they couldn't pay them.

Follow this (warning: bad math): Your family income is a combined 60k/year (maybe lower). Neither of your credit ratings are all that good - many times, you have paid credit cards late, and occasionally car loans go unpaid for a month or two. You are renting. All you see on TV are home flipping shows - you want a home too! You decide to call a mortgage broker who, amazing, tells you that you can get that home of your dreams - with no money down!

They come back with a deal for a 40 year mortgage, nothing or very little down, at sub-prime rates for a nice 3 bedroom house! The payments will be approaching $2k/month - and you're pre-approved! Maybe even negative amortization as well - low payments today, you'll always have more money tomorrow!

DO YOU TAKE IT?

Sadly, many people say yes.

This is why social security should never be privatized.

Fun Fact: Over the last 10 years, combined incomes have flat-lined, but spending has gone up. Many will, in fact, not make much more "tomorrow".